The Iran Nuclear Deal Can Survive Despite Future Sanctions

By Elizabeth Rosenberg

Many observers of the Joint Comprehensive Plan of Action (JCPOA), including both supporters and opponents, believe that new US sanctions on Iran will fatally endanger the deal and that the United States will be the one to blame.

In reality, however, there is broad scope for the United States, the European Union, and others to pursue additional sanctions that do not violate the JCPOA. In fact, the most practical approach to supporting the Iran deal is one that seeks to enforce the deal and simultaneously use sanctions and other means to address Iranian threats. Policy leaders in Washington should aggressively pursue sanctions on the Islamic Revolutionary Guard Corps (IRGC), including its agents and entities supporting Iran’s missile program and terrorist proxies abroad. Policy leaders should also pursue sanctions on Iranian entities supporting the ruthless violence of Syrian President Bashar al-Assad and Iranian abusers of human rights. These efforts will allow the United States to signal condemnation and publicly clarify a tough policy strategy on Iran.

The exercise of crafting such new sanctions additionally will play an important role in moving US policy on Iran forward. Developing and rolling out new tranches of Iran sanctions will aid the security community in thinking through, and perhaps testing, authorities and tactics it will need to respond to risks that may emerge as enrichment and weapons restrictions in the nuclear deal roll off. Developing new sanctions will also have a corollary benefit of helping the US policy community consider tactics and priorities to guide responses if the nuclear deal collapses. This work will not be without its challenges, and must be accompanied by constructive measures to seek limited engagement with Iran where it serves US interests.

The most important strategic lesson that decision makers must now bear in mind about Iran sanctions is that keeping them nimble, updated and internationally coordinated is essential for their credibility and policy relevance. This means active management of the sanctions program, doubling down on sanctions that advance core US security interests, and pruning away those that lack effect or undermine broader strategic goals, such as nuclear security. Aside from sanctions, there are few other ways to so deftly draw public attention to Iran’s illicit behavior, in the nuclear field and beyond, and to create economic and strategic leverage for potential future diplomatic engagement. Also, sanctions offer today’s policy leaders a unique and powerful way to create a legal basis for strategic, and often economic, arrangements to address pressing Iranian threats outside of a formal treaty organization or multinational institution.

A genuine US offer to remove more sanctions in exchange for meaningful Iranian concessions could be a policy option in the future, even coexisting with further sanctions on Iran. The JCPOA is the most celebrated contemporary case demonstrating how unwinding sanctions can be a powerful incentive for change. Building off that basis, it is not preposterous to imagine that an effective strategy for changing Iranian policies even further in the nuclear file would be to offer a radical removal of all remaining proliferation sanctions, including the myriad US proliferation sanctions still in place, in exchange for complete Iranian disavowal of all nuclear activities now and in the future.

However, this scenario is politically infeasible at present, in both the United States and in Iran. Decades of mutual demonization, enmity, and lost trust and political and economic connectivity make it impossible. Also, current Iranian leaders stake deep existential significance on sustaining at least limited nuclear enrichment. They cannot maintain credibility and political support if they completely abandon nuclear pursuits. These are among the most prominent reasons that guide pragmatists to understand there is no better nuclear deal to be had.

In this context, many deal supporters and opponents see the path forward for US-Iran relations involving more, not less, sanctions. This is the case even if Iran and the West can cooperate in limited ways on issues of mutual interest and sustain limited diplomatic communication. Now, a core task for US policymakers should be crafting Iran sanctions to advance US counterterrorism and regional stability interests while also preserving the nuclear security benefits of the JCPOA.

US policy leaders should adopt three principles for future Iran sanctions. First, they should move quickly to aggressively implement terrorism, human rights, and regional destabilization sanctions, signaling a tough position on Iran’s activities of concern. A relatively new feature of this effort could include more sanctions on Iranian entities supporting Assad’s brutal campaign of violence in Syria, a particular concern for many in the United States and Europe. Such sanctions will require a heightened degree of diplomatic consideration and care. This can ensure that for this complicated security matter, sanctions appropriately pressure and expose Iranian support for Assad, but are not intentionally or inadvertently used in a manner that would undermine other core US interests in the Middle East, including sustaining the JCPOA.

The second principle for future sanctions is that they should focus on specific individuals and discrete entities involved in threatening activity, publicly disclosing as much identifying information as possible about the targets. This will make it easier for banks and companies to effectively comply with sanctions, and to engage in permitted activity. It will also make it easier for allied governments to designate these same entities with their own authorities. Moreover, it will clarify to those inside and outside Iran the specific reprehensible activity for which Iran is responsible and diminish the misimpression that US sanctions, rather than Iranian actions, are the source of Iran’s woes. It is possible that this will offer an incentive for some in Iran to distance themselves from designated entities, including the IRGC, in order to engage in permitted business.

The third policy principle for future Iran sanctions is the need for multilateral coordination on strategy, diplomacy, and messaging, in addition to parallel designations in different jurisdictions. This will expand and strengthen an international coalition in opposition to Iran’s support for terrorism and regional destabilization. It will also create more meaningful economic and political leverage for the international community to deter Iran from this malign activity.

In parallel to sanctions efforts, the United States should craft general licenses to support limited new forms of civil society engagement between Iran and the United States. These licenses will have both strategic and substantive benefits. They will clarify that the United States seeks to pressure Iranian political figures engaged in threatening activities, not the people of Iran. Important to those who support the JCPOA, even grudgingly, this will counteract the impression that the United States is involved in blunt, ideological efforts to punish Iran and collapse the deal. Creating these licenses will hardly make the United States look soft on Iran when viewed next to the aggressive sanctions Washington should simultaneously pursue to counter Iran’s destabilizing policies. Rather, they should be viewed as a means to support constituencies in Iran favorable to a more accommodating stance toward the West.

Specifically, US policy leaders should now pursue the following policy activities.

The Treasury Department should initiate a major campaign to designate IRGC entities, leaders, and front companies, inside and outside of Iran, linked to Iran’s support for terrorism, regional destabilization, and ballistic missile program. Additionally, they should designate Iranian entities supporting the Assad regime.

The Treasury Department should designate a cohort of leaders involved in the perpetration of human rights abuses in Iran, including abuses linked to detention of journalists, civil society activists, and foreign and dual nationals.

The State Department should lead a broad diplomatic outreach effort to partners abroad, urging them to use autonomous authorities to designate US-sanctioned entities, particularly those linked to terrorism, support for Assad, or Iran’s missile program.

Foreign policy leaders in Congress should complement administration efforts to engage counterparts in Europe through independent outreach to European policy leaders, also urging them to enact autonomous sanctions on Iranian entities supporting terrorism, ballistic missile activity and regional destabilization.

Foreign policy, national security and financial services leaders in Congress should initiate a series of hearings considering the specific new authorities or measures the United States should consider, including sanctions, when various restrictions in the JCPOA roll off, or in various scenarios of deal collapse.

The Treasury Department should pursue general licenses to allow new forms of people-to-people contact between US citizens and Iranians, designed to foster cultural exchange and support Iranian youth, civil society, and entrepreneurial engagement with US counterparts.

US policy leaders, whether in the administration or Congress, should encourage foreign counterparts not limited by sanctions, as US citizens are, to communicate to Iran the anti-money laundering, counter-terrorist financing and financial controls it must have in place in order to reap the full benefits of available sanctions relief and permitted ties with the West. The US administration, through its participation in multilateral financial institutions, should use its influence in these bodies to further promote this effort.

Sanctions and other financial measures must be part of a broader US strategy to address Iran’s threatening policies while preserving the nuclear security benefits of the JCPOA. Policymakers should not assume that they can generate the overwhelming economic pressure necessary to compel another major agreement between Iran and the West, such as a relinquishment of Iranian support for terrorism or its missile program in exchange for sanctions relief. Rather, sanctions should be viewed as a central tool to deliver a firm message to Iran and coordinate and bolster an international coalition to push back against Iran’s destabilization. Such a coalition may be the basis for a measure of deterrence if Iran-Saudi tensions escalate, or if Iranian proxies in the region expand their aggression. This coalition of sanctioning states will also be a diplomatic backbone to help ensure oversight and non-interference of sanctions with the JCPOA. It will furthermore be essential to coordinate international allies in crafting the response in case of the nuclear deal’s demise and the resulting breakdown in proliferation security.

Elizabeth Rosenberg is a Senior Fellow and Director of the Energy, Economics and Security Program at the Center for a New American Security and a former Senior Advisor at the U.S. Department of the Treasury.

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